Odd Lots - Henry Blodget on AI, Dot-Coms, and What's Changed In 25 Years

Episode Date: May 5, 2025

What does history say about how big the AI boom can get, and who will ultimately win out? When does a boom turn into a bubble that turns into a bust? On this episode of the podcast, we speak to Henry Blodget, the founder of Business Insider (and Joe's old boss there). In the late '90s, Henry was one of the most well-known Wall Street analysts covering internet stocks, before the crash and recriminations, which ended up in his lifetime ban from the industry. His new project is a publication called Regenerator, which will again focus on business and tech. We discuss the state of the AI boom, and what lessons we can draw from the dot-com era. We also talk politics, what's changed on Wall Street over the last 25 years or so, and a bit on the state of the media business. Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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Hello and welcome to another episode of the Oblot. podcast. I'm Joe Wisenthall. And I'm Tracy Allaway. Tracy, you know, I can never get enough talking about late 90s.com stuff. I know. You're just gifting episodes to yourself at this point. But that's fine. I'm into it. That's always been the case. And for all the years we've done this podcast, I've made that comment here and there. But, you know, recently, it has a particular salience because people are trying to understand AI. We had that conversation down in D.C. several weeks ago with Blair Levin, talk about some of the similarities and dissimilarities between AI and telecoms. So at least we have an excuse for these conversations. There is definitely a

newspeg. I'm looking at a chart of Super Micro right now. They just put out results that I guess were disappointing because the shares are down about 20%. We're recording this on April 30th at 10.4 a.m. And Joe, can I just say we can labor this intro as much as you want about like similarities with early 2000's tech bubble. But I'm just excited to speak to your old boss. That's all I want to get out of this conversation, just Joe's stories. Okay, that's fine. So this is an episode that I've wanted to make happen for a very, very long time.

And the timing is suddenly working out. I don't even know what we're really going to talk about, but we'll have a good conversation. Yes, we are speaking to my old boss. So a couple of major caveats or disclaimers. etc. I owe this guest a huge chunk for my own career and the success and the good fortune that I've had in my career. We're going to be speaking, of course, to Henry Blodgett. He's the editor of a new publication called Regenerator, which is going to be focused on innovation and business and news and tech and stuff like that. Of course, the connection to me is that he is the founder of Insider

when I joined, I think it was called Silicon Alley Insider. Oh, that's a blast. And then Business Insider and then Insider. I'm not exactly sure what the final iteration of the name was. And of course, prior to that, several years earlier, he had been a tech analyst at Merrill Lynch, one most famous analysts of the sort of tech sector. And of course, have to acknowledge the second caveat or disclaimer here, which was he was famously or infamously prevented afterwards from working on Wall Street.

Have to mention that. Maybe it'll come up. But with all of this throat clearing out of the way, Henry, thrilled to have you on the podcast, finally. I am. This is a little weird. I'm actually a little nervous. If I'm being totally honest, I'm actually, I don't usually get anxious ever in any setting anymore. I'm a little anxious talking to my old boss.

Well, it is great to be here. It's a privilege. You guys do an amazing job. And I would say, the student has become the master. No, but for real. Thank you so much for coming on odd lots. Really excited. I'm trying to think.

Oh, this is very sweet. I don't know. No, I'm like actually a little bit like a reclimped. I'll ask a question. Yeah, Tracy can ask the first question while I collect myself. How did you find Joe? Oh, I wonder if you remembers. I was aware of Joe at another publication. I can't remember what it was.

And I can't remember whether I hired Joe or Julie Hansen hired Joe or somebody else. But there he was. And we were in an environment where I was surrounded by a newsroom full of very eager, excited folks, and again and again and again, the one who differentiated himself by his incredible fascination with and mastery of all things, and his ability to write with an internet metabolism, which is somewhere between talk radio and magazines, whereas a lot of other folks wanted to come in and basically recreate the New Yorker. And so we spotted your talent very fast. And then your career took off like a rocket chip and we were lucky to have you

as long as we did. I like the idea of people just not finding Joe, but just being aware of Joe. It's sort of like the Mr. Bean intro where you just fall out of the sky. Joe's just there. And everyone kind of became aware of it. So there's actually a very elegant connection to all of this, which was the first time we met was during, you know, it's like probably tech week in New York. And we met at a party at Gracie Mansion when Michael Bloomberg was the mayor. And now we're here at Bloomberg. And so we met. I was at paid content.

I was covering earnings. You guys at Silicon Alley were covering earnings and so forth. And we chatted. And then several months later I joined. All right. Enough about all this personal stuff. No, I'm going to have more questions. Go on.

You know, I love talking about the late 90s. And we'll get small picture, but big picture. When you look at this incredible enthusiasm for AI, and it's sort of cooled off, obviously, in the market over the last several months, but from a business perspective, it's tons and tons of AI interest. You know, what reminds you of the late 90s, whether it's telecom or just dot com, and what feels dissimilar to you? Well, stepping back, if you look at AI as a sector, that is very reminiscent of what happened

in the late 90s, where in the mid-90s, the internet came along. Everybody knew it was going to be huge. Yeah. There was suddenly a huge scrum of investment capital attracted to it. We had this experimentation for five years where a lot of people were making money hand over fist. Then we went through a devastating crash, which is normally the pattern here. The same thing is happening within the AI sector. But I should step back and say, just to check, I looked at the broader tech sector.

And we are categorically not in a tech bubble right now. look at the big, magnificent seven, whatever we want to call them, they are trading at high, but arguably reasonable earnings multiples. And that was the case, say, six months ago, too, before we had some higher multiples, but still 30 times earnings or 35 times earnings for DeVita, which is the big AI stock or the most direct way to play it. But yes, if you look in the private markets, and this is one thing that's very different is all this is happening in the private market now, so we don't have a very good view of the financials of these companies. But all you need is like a PhD in a white paper and you're getting like half a billion dollar valuations for these startups, right?

Yes, it's extraordinary. And I think one thing to look at to sort of check the sanity of it is let's look at the biggest one, Open AI. Okay. They just did a huge round where they raised $40 billion at a $300 billion valuation. Six months to 12 months earlier, investors were being declared absolutely insane for investing at $100 billion. and 150, and now here we are at 300. And so what does that mean? Is it clearly insanity? Well, if you look at OpenAI's fundamental business based on what we know, which is, again, very secondhand and so forth, they are doing something like $12 billion of revenue this year. Now, stepping back,

that is an incredible number for a company that is five years old. This company is growing a faster rate than pretty much any company in history. And if you look at one of the financing models from a year ago at $150 billion dollar valuation, apparently the projection was that they would do $100 billion of revenue in 2029. If that is the case, and I would assume that that number is probably higher now, given that they've jacked the valuation up, then, okay, we're looking at three times revenue. Three times, 2020. A lot has to go right.

But if you believe that OpenAI is going to win this next wave in the same way that Google or Amazon ultimately won the Internet wave, three times revenue for that, even given that they're burning $5 billion a year, you know, you can see how professional investors who really actually do know the numbers are getting there. So I would just say if you look at that, that is probably the justification. And then the other thing that people forget, or at least I don't hear when I hear this discuss. is that most professional investors are investing in preferred stock. That's very different than public markets where we're buying common because you have downside protection. Basically for SoftBank and the others who just invested in Open AI at $300 billion to lose money, open AI has to be liquidated at less than $40 billion. Otherwise, they get all their money back off the top and they may even have provisions in the deal

that give them a ratchet on top of that that give them a return. So it's very hard to really know what's going on. But that's the thing. So stepping back again, you look at that and you say, whoa, based on today's numbers, yeah, that is a fantastical valuation. But this is probably what investors are looking at. Now, another point that Brad Gersner and others have made about this is if you look back in the 1990s what happened with the Internet companies, we had the premier companies like

Amazon and Yahoo had these phenomenal valuations. And then there were all of the secondary companies. that looked similar, did the same thing, were in the same market, and a lot of investors who missed the big ones came roaring and said, oh, I got to get into Lycos or Excite or InfoSeek or CD now. Yeah, yeah, yeah. They're cheaper than Amazon. Yeah. I will just say that pretty much all of those companies went to zero. Yeah.

So the idea now that you can escape the incredibly high open AI evaluation by investing in Anthropic, or GROC or any of the secondary ones. Maybe that works. Maybe there's room for dozens of companies. But if past its prologue here, there's going to be one winner, which the last thing I'll say is, by the way, it might not be open AI. Right. Because if you look at the big winners of the 1990s, Yahoo, which looked like it would be in 1990. And they got creamed by Google, which came in during the crash.

Amazon almost went bankrupt. You did not have to buy it in the late 1990s, although I did. And then we wrote it down 90-something percent. It almost went bankrupt. And then finally, seven years later, it went to the moon. But these things play out. I do think we'll have the same sort of pattern in this sector that at some point will hit a peak. Everything will crater.

Everyone will pile on and say, oh, see how stupid everybody was. And then a few companies will go on and make all of the money that was lost worth it for the folks who are in the winners. I'll just say two things, having been worked at actually two venture-backed startups, paid content, which did sell for a little bit to the Guardian and also Insider. I'm very intimately familiar with the concept of preferred stock versus common stock and how that gets treated in an acquisition. And one thing, Tracy, that I was like to working with, Henry, he actually knows numbers and remembers these details, which I appreciate in these conversations. Yeah, I can tell. Okay, Henry, you just went through all the AI stuff. So I'm just going to ask you, what's your favorite memory of Joe at this?

No, come on. Stop. Stop. Okay, okay. I won't. I won't. I won't. Okay, on AI, it strikes me that one of the big parallels, and you just touched on it there, but it's the narrative, right?

And it's the idea that AI is going to change the world. Back in the 90s, we had the whole, the Internet's going to change the world, which was true. It was true that the Internet changed the world, just potentially not in the way analysts had been forecasting at that time. Talk to us about, I guess, the story that is being built around AI. And as a former Wall Street analyst, I imagine you are very, very familiar with the importance of narratives slash stories in pitching some of these investment ideas. Yes. I think that if you look at the idea behind what's happening with AI, it's a revolutionary new technology that will smash into the economy and have major changes. And one of the theories that sounds right to me, certainly based on.

on the internet and other technologies that have come in, is that the economy will now endap, and there will be three kinds of companies. There will be traditional companies that refuse to use AI and ultimately lose their competitive advantage, or maybe they are in a business that has nothing to do with AI, maybe paint or something like that, so it doesn't matter. There will be companies that try to integrate AI into their traditional operations, and those would be analogous to the clicks and mortar companies back in the 1990s and since. And then there will be companies that are, built around AI. So they're not providing the technology, but they are using AI in a new way, and that's giving them the ability to be vastly more productive or grow at a much greater rate.

And so I think that that's the way we'll see the economy adapt. And I do think the storytelling, it's not directly related to AI, although part of it is one of the stocks that fascinates me right now, and this will be the exception to my declaration, there's no bubble in broader technology is Tesla. Tesla has always traded at a multiple that has almost nothing to do with its current operations and everything to do with Elon Musk. Some imagine a future business that's going to produce a mountain of cash and it's always six to 18 months away. People used to talk about Steve Jobs' ability to create a reality distortion field. Elon Musk is much better at it than Steve Jobs was to the point where he can go on an earnings call

on a disastrous quarter like Tesla just had, tell a story about robotaxies and humanoid robots and trillions of dollars of revenue. And he's going to go from spending less than a tiny percentage of his time at Tesla to a little bit more of his time at Tesla. And in the week since, the stock is up 20%. That is because of two things. One, Elon's ability to tell an amazing story.

And that is what leaders have to do. They have to rally people to work together to create a better future. And then two, importantly, it's not just storytelling. Elon has done on the business side some things that are simply astounding. One of the companies, if you created only one of the companies he's created, that would be a Hall of Fame performance for most entrepreneurs. He's created eight of them, the rocket company, the satellite internet company, Tesla,

which people forget. No new car companies to survive for 75 years. And suddenly he builds one. And even now, in its demolition. state, Tesla is still has the single best-selling car on the planet. It's amazing. So that's what storytelling is. And so much of what I think Michael Moritz from Sequoia said this the other day, so much of what he would teach in business school if you were teaching a course is not finance or financial analysis or accounting, but how to tell a story. And get your,

not just your investors, although that's important, but your employees on board and excited about this great thing that you're going to build and the suspension of disbelief. And I do think that Elon Musk is extraordinarily good at that. And by the way, Sam Altman must be extraordinarily good at it too. Or they wouldn't be where they are. I'm Matt Miller. And I'm Hannah Elliott inviting you to join us for the Bloomberg Hot Pursuit podcast. Every week we bring you news and industry insight on everything cars.

And we do a whole lot more than just talk about cars, Matt. We actually get behind the wheel of basically every latest model, especially the luxury ones and the sports cars direct from the showroom floor. It really is remarkable how many cars we have access to. I feel a little bit guilty about it, but everything from $40,000 EVs to exotic half-million dollar supercars. We also speak with the insiders who shape the automotive industry from the top CEOs and collectors to visionary designers and racing champions.

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that a cool wind, a cool breeze was coming on. Do you have a memory of like, oh, maybe some of these growth forecasts? Because when you think about, well, what could dent private AI evaluations or what could even dent, you know, public ones, or what could invent a Tesla? Was there a moment that's like, huh, it's not quite living up to what I thought in terms of some of the numbers, et cetera? Yes, definitely. But I should also say this benefits from the 2020 hindsight.

Sure, sure. Which is if you want of the features of these periods of market history, and if you look at all of them, you go back to tulips, or you look at the 1920s or the PC bubble in the early 1960s or 70s, I think, or 80s, you know, they all share these features. And one of the things that I remember very clearly about the 1990s is pretty much every year you had a deafening chorus of people saying, this is lunacy, it's just a bubble, it's crazy, it's a fad. And every year there was a pullback of 20 to 30 percent where everybody freaked out and you had enormous numbers of stories written saying, See, everyone was a moron. They were all insane. And it's over now. And then we've-

I like how Henry talks in business insider headlines. We would then roar off to new highs. And then the same thing would happen the next year. So if any one of those had led to the crash, we would all look back and say, see, that was the thing. And I will say that the other thing you find in these bubble periods is that there are two kinds of people. There are the people who think that the world is forever different and all the old valuation metrics can be discarded because it's different this time and so forth. And then there are the people who think, no, we are in a bubble, but I'm going to ride the bubble right to the end and then I'm going to get off right at the top before everybody else crashes. So I would say that by 1998, and I wrote a lot about this at the time, I was very much in the

We Are in a bubble camp, but I was also in the camp of the Internet's a profound technology that's going to radically change things and create very huge companies. So my investment recommendation early on at Merrill Lynch was, hey, by the way, don't touch these things if you're not incredibly risk-tolerant because it's just way too much risk. But if you are, buy a few of them, so you have some diversification, and plan to hold them for five to ten years. And that's what I did myself. And I look back at my investment in AOL, my investment in Yahoo and others, and say, what on earth was I thinking? What an idiot.

Wish I hadn't. Fortunately, my investment in Amazon, despite almost going to zero, that actually over 10 years, it paid all back. So that is the way to do it. And, you know, no public investors are investing in AI now. But if you were going to, I think that sound. And I would even tighten the screen tighter, which is like only invest in the best ones because everybody else is going to be toast. But with that big preamble, what was the moment? So in 2000, as I recall, part of what it happened, part of what was fueling the bubble.

And you find this in every bubble is that there is something that is goosing. the fundamentals of the companies that is actually attached to their valuations and what's happening in the markets. And so I was really looking for that. And usually it's debt. Like people are borrowing margin debt or big debt. And in the telecom sector in the 1990s, that's what it was. All these telecom companies borrowing so much money, they're buying all the Cisco equipment, everything else. And eventually that train stopped and crashed. But in the consumer internet sector, which is where I was focused, like advertising, I was looking for that leverage. I knew that the problem was that you get embedded in leverage in the system. And in the summer of

2000, it started to break down, but I still didn't see what it was. And you know what it was? What it was was the incredible public market appetite for these securities, both on the debt side and the equity side. And so every new company, as you said, I think there were something like 400 companies that went public in 1999, just insane. Every new company would go out and raise $30 million. They would immediately spend $5 million on a portal deal with you. Yahoo and they'd spend $5 million on Sun Microsystems servers and they'd spend $5 million on Oracle and so forth. And they were all losing huge amounts of money. So what was actually happening was even though they weren't borrowing money, they were getting money from the public markets and

they were turning into actual spending. So if I were an investor in an IPO, that was turned into revenue for Yahoo. And that flattered Yahoo's revenue. Exactly. And then in meantime, you had this narrative that had been going on for years, not a week, But years where all of the old economy companies and their management teams were getting totally shamed by resisting the internet. Meanwhile, Amazon puts up these extraordinary numbers every quarter. Barnes & Noble is not going to kill them. In fact, they're going to kill Barnes & Noble.

It started to become clear. So you have panic in the traditional economy saying, the train is leaving the station. And if I don't get on that train or run after it, I'm going to get fired. So even all those guys started coming. competing for the Yahoo deals and others. And so you just tremendous creation of fundamental revenue. And then when the IPO market closed and the debt market start to close, suddenly the tap got cut off. And within nine months, Yahoo, one of the best stocks in my sector, dropped, I think, 93%, because all of its revenue disappeared. It's so fascinating. And so that was

the leverage. And so something will be happening here that's like that. And maybe a lot of companies are panic spending on AI because they don't want to look like they're behind the times. Maybe a lot of consumers are trying AI and they're not going to actually figure out how to use it in a way that's profitable. So there may be a lot of leverage getting built into the system. And by the way, very obvious one is we have this theory right now that Open AI, you know, it's all about just building bigger clusters and spending more on CAPEX and Microsoft. Now, they're all spending $80 billion a year on CAPEX. CapEx. We may have another deep seek moment where it's suddenly like, oh, wait, we can do it with a little software. We don't need to spend all that much on the chips. And then everything's going to crash.

Tracy, I've been joking that if you're an investor in a big tech company, you probably hate to see the huge amount of CapEx being spent. But the only thing worse would be a big decrease in the amount of capx being spent because that would be the actual sign of pain to come. Yeah. Well, okay. So on this point, I mean, you touched on this. earlier when you were talking about how a lot of the financing for AI right now is coming from the private markets. But it seems to me that the incestuousness in the tech industry or maybe the circularity is a better way of putting it, this is the issue, right? And when I see some of the things going on right now, like for instance, you know, hedge funds, loaning core weave based on

GPUs, that's it. Or Nvidia, not investing in Coreweaves so that they could buy in video chips, stuff like that, yeah. This seems very like circular slash incestuous to me. And at the same time, because so much of it is happening in the private market between hedge funds and private equity and these private deals, it seems very difficult to track. That's right. And that is absolutely happening. We're seeing it.

And then the other thing that I think people aren't talking about it, I said it earlier. I said, I open a video, my goodness. It's one of the big, the pure play way to play AI. It's only trading it 30, 35 times earnings. That's reasonable. Okay, but that's reasonable based on Navidia having monopoly power being the only source of these chips, just selling an extraordinary number of them over the last year or two or three. And what happens if demand for those chips drop or China vaults past us in chips?

Suddenly we don't need them anymore. There's a better way to make AI other than buying so many chips. Then their earnings are going to crash. And maybe Navidia is actually trading it 200 times next year's earnings. We don't know yet. We just know in hindsight and so forth. But to your point, that's exactly the way to look at it. And I would say stepping back from it, we're still pretty early in terms of time in this wave.

We're only a couple of years in where it's really getting going. And so, you know, maybe it's 1997 as opposed to late 1999. I don't know. And that's one thing. I mean, one of the things I'm trying to figure out is, okay, Navidia's edge, how long do they keep that? And the reason the deep seek announcement was so unsettling, and by the way, Navidia stock has crashed and not recovered since then is that they seem to have figured out a way to produce similar quality technology without the chips. And then you have a lot of people coming back and saying, oh, no, they bought them or they're using them in Vietnam or whatever. Yeah, exactly.

But that's why Navitya is not recovered is because people don't believe that. Yeah. And of course, now people are also talking about Huawei getting significantly better. be better. And their chips could be close, maybe one generation behind. So the prospect of further deep seek moments, so to speak, is certainly out there. And of course, that could also threaten open AIs valuation, just given how much, you know, deep seek is open source and whether you can actually monetize that AI edge that they have, presuming they still have an AI edge, lots of questions. I'm going to throw a different curveball into the conversation. So you mentioned Elon,

mention Amazon. Jeff Bezos was an investor and insider correctly. I don't know if you ever talk to those guys anymore or whatever. Elon obviously the most public face of tech's, you know, warming towards Trump. And Bezos, to some extent, he was at the inauguration to, I've asked this question to others and I still don't, what happened? Not like, is it wrong or right or whatever? What changed in tech from your perspective, such that these people who were extraordinarily successful under the sort of existing way we think about economics and politics, that they felt compelled to throw their support to varying degrees by someone who, at a minimum, setting aside his success, really wants to change the system. Where did that come from, do you think?

I think it's a great question. I've spent a lot of time actually looking into that and talking to people of trying to figure it out. And what I've been struck by is the level of personal anger involved. Even after the election, after President Trump won, there were what I would describe as victory laps taken by some very powerful and influential folks in Silicon Valley. And even then, you could just hear receiving anger and desire for payback. And I think it's a few things. One, I do think the Biden administration did not do a good job of making the technology industry writ large. And again, this is one of the United States most powerful, successful industries. We have led the world not feel even a little bit appreciated.

In fact, the whole anti-billionaire rhetoric where we've got to get the pitchforks and so forth, it's all bad. Biden administration, you know, you really need to diss Tesla back then and Elon Musk when. when he was clearly waffling at that point, they didn't call it. Also, when we're in a period of we are saying that EVs are an existential part of America and not even invited to the conference or what it was. So I think that was part of it. I do think the, for lack of a better way to describe it, the woke wave and Silicon Valley companies feeling like they were being, there were attempted takeovers by the employees

over the CEOs. I think there's a clapback effect there. And then I think there's just a purely financial calculation, which is, look, we have a job to, we got to look out for our companies and our investors and so forth. And listen, this administration, referring to the Biden administration, is way too much regulation and process and they clearly don't like what we do. And at that point, ironically, most people in business did think that the Trump administration would be a pro-business administration. Yeah. And for a day, it looked right way. And now it does not.

In fact, it looks like the most anti-United States business administration in anybody's memory, hundreds of years. So I think that's where it came from. And I also look, Philincomvali also has an inherent niger contrarianism. And I think that was at play also, too. It's like, oh, everybody thinks something, then why are they wrong? And what's the other way of doing it? But I also do think it is shifting back now. Not to the point where anybody who supported President Trump publicly or campaign for him or whatever is.

recanting. In fact, when that comes up, it's always, oh, and look at the alternative. We are, this universe is so much better. But I will say, they're saying it a little bit less enthusiastically than they were a month ago. A little less loudly, I guess. Yes. And I'm starting to hear, well, you know, maybe the tariffs, maybe it was good that we're highlighting the problems with China, but like. It's an expensive media campaign. Could there have been a better way to do it? Could you have actually had a long-term plan? And could you have. have phased it in so you didn't go and punch American companies in the mouth along with consumers. Is there something behind the trade war? Because in the beginning, remember, it was all just,

hey, he's negotiating and shooting from the hip. They're going to be on their knees in the office tomorrow morning. I don't hear that much anymore. And I think actually folks who had thought that President Trump is a quote, free trader are actually realizing, no, actually the guy who loves You can't defend that one. He's been talking about tariffs for 40 years. You can't defend. He loves terrorists. And so I do hear that and I do hear fears that the longer this lasts, it might have really

lasting impact. And so I think it's coming around. So I assume you're still connected to a bunch of startups and founders and you're working on your own new thing right now. What's the funding environment like at the moment? Are you seeing people, that uncertainty around policy start to feed into funding for, you know, things that potentially are not at all directly related to manufacturing or tariffs.

I don't know what's happened in the last month in the venture market, especially the second year, for Series A and so forth. My guess is the early investing is pretty much fine, as long as the capital is there, a company that has a small valuation, that's probably there. But usually where you see it is in Series A, Series B, Series C, because venture capitalists are very tied to the exits. It's one of the real problems in venture capital for the last really five, ten years. It's been the IPO market has been so sclerotic.

You have to be a colossal company. And so that's why a lot of companies have looked for exits. But I will say that one of the big problems with waging a trade war this way where literally overnight you decouple two economies that are deeply interlinked is that it is impossible for companies to plan. Yeah. And Apple is a very important. very good example. They spent decades building a world-class global supply chain that benefited the

entire world, including the United States. Consumers, we get these amazing iPhones for the price we get them for, and to effectively say, guys, you've got to put that supply chain on a ship and get it to Texas by tomorrow morning is just not going to happen. And so Apple is doing what any intelligent company would do, which is saying, you know, look, I do think that there's going to be this long-term pressure to do you cover from China. We need to diversify a little bit for a lot of reasons. So what do they do? Do they move eye production for the United States back to the United States? They do not. They move to India, which someone will spike the football and say, that's exactly what we wanted to happen. India is a friend. China's an enemy. I will appall most of Oddlott's

listeners by saying that I actually do not believe that China's enemy. And I liked the fact that- I don't know if that's a falling down on the list. I actually liked the fact that our economies were super integrated. And yes, the trade relationship is unfair. And yes, there are a lot of things that America and the allies it used to have could have done to bring China to the table and make it fair and open up the markets. But United States companies did a hell of a lot of business in China and still do. And that is now at risk along with our medals and everything else. And by the way, again, I understand from a political perspective the virtue of having an enemy. It's very easy. We'll divide the world. It's us versus them. But the more we are enemies,

to me, the more risk we're eventually going to actually end up in a real war. Not just that. I like the interlinkedness. We live in a globalized, integrated economy. I think imagining that the United States can suddenly just decouple itself and we're thrilled. I think what's going to happen is the rest of the world's going to knit together and go on without us. And so even going back to the premise for the trade war, I have issues. Just to be clear, I don't think there is no Odd Lots of view on anything, let alone our listeners. I think if, you know, if there is something closed, it's actually quite a bit of. Well, what I will say is, and if odd lots, if we think the same way, that's terrific. What I hear when I talk to some of my friends who are really plugged in is, oh my God,

God, listen. Oh, you are the most naive human in America. How can you not understand that this is not a gladiatorial fight to the death? And China is our enemy, and we must sock it to them. I just simply do not see it that way. World trade is a cooperative activity. Yeah. It's like a potluck dinner.

This is a good. So I would say if there's something close to a house view, which there is no house view, it's a certain high level of admiration. for what's been accomplished technologically in China and economically over the last several decades. And not a gladiatorial sense, but there are areas where it creates risk. But I do get the impression, especially in D.C., that this is, look, this idea of U.S. versus China has got to be the most bipartisan view that there is in the world. You would say in your circles and tech and media, that's shared that view.

Absolutely. And Ezra Klein and Tom Friedman of the New York Times have a great. podcast about this. Tom Frieden's written about this. And another guy who's very outspoken from the Silicon Valley community about it is Bill Gurley, formerly a benchmark, who basically say this idea that we're going to beat China in AI and we're going to quote, win the AI war. It's crazy. It's not going to happen. And that's the real message from Deep Seek. And here we have all of this plotting. Like, how can we keep the Navidia chips away from China? We've got to maintain our advantage and so forth. Meanwhile, all these companies suddenly

appear in Vietnam and everywhere else, that do ho, low and hold, have huge data centers filled with Navidia chips that anybody can use and so forth. And we've got to now agree we're going to send them the less powerful chips, although even President Trump's now thrown that out, costing Navidia investors $5 billion a year. I just think, again, the more integrated our economies are the better. I do think the best way to approach the China imbalances, and they are real would have been to get together with Europe and a lot of other countries in Asia and say, hey, guys, we love working with you. But you got to change a few things.

You got to open the markets a little bit and so forth. And I just, I think one thing I hope that everybody in Washington and I think Wall Street tends to have a much more clear-eyed view of it is, listen, China is going to be much bigger and more powerful than the United States. They are. That's okay. we blew past Europe 75 years ago. You know what?

People still live in Europe. They still have culture. They have good lives. They have good jobs. And you know what? We're not fighting them. They're not fighting us because we got more powerful. So I think the United States has got to get over this idea that we rule the world forever

and we got to keep down China. China, look at it as a human being. 25 years ago, poverty and China. China was appalling for hundreds of millions of people. And they have now moved out of property. It's an extraordinary company. That is a good thing. Yeah. Not a bad thing. It's a good thing. And the richer countries get, the less likely they are to defend themselves with missiles and so forth. So I just think we should step back and look at this idea that's been created. And as you say, extraordinarily bipartisan in VC in particular, that China is going to be our enemy forever. We've got to beat them.

We're not going to beat them. It's not going to happen, but we can still take care of our own security, build amazing companies, get richer, have a remarkable country, and coexist and work with China. That's my view. And you can tell me, most naive guys. I like it. I like it. I like it. On April 4, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App.

From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Can I go back to one of the disclaimers in the intro? Not about Joe, the other one, about you being sort of excommunicated from Wall Street. And part of that was based on, well, all of it was based on research. from the tech bubble, right? And as a consequence of the tech bubble, we saw lots of new regulation around how analysts can actually publish research and Chinese walls in investment banks and things like that. Looking back on what was published back then versus what's being published now on AI, do you see similarities? Do you see improvements as a result of some of those measures taken in the

early 2000s? I think that, well, stepping back, yes. Thank you for bringing up my excommunication. Still just a mortifying episode to me, and I am so grateful to you, too. And there's so many other people in the last 25 years who've given me this second chance and so forth. And, you know, I learned a ton about that process. Elliot Spitzer was the guy who went after me, obviously, and everybody. We had our own thing afterwards, you know, and suddenly he had his own troubles. And then I was on his show, and he was on my show.

and life goes on, and we even had a lunch together at one point. So life goes on. But a very much learning experience, and by the way, because we talked about bubbles earlier, that is the final feature of these episodes. John Kenneth Galbraith has written about this where there's a huge backlash against the folks who were sort of held up as being the geniuses and doing really well. And that's how the society moves on and so forth. So anyway, I wish I hadn't been in the middle of that, but I was and so forth.

and it's too bad because I love Wall Street. But anyway, you look at research, I'll tell you what I think the biggest thing that has been lost that sucks and it's not actually research. It's the fact that we don't have an IPO market anymore. And my view at the time and now is that the more opportunities investors have, the better. And early stage tech IPOs are highly risky. Most of them end up going out of business. People lose their shirts and so forth.

But I don't think that necessarily the job of the public market is to make it impossible for investors to lose their shirts. I think actually it is to create a range of options. We had this amazing, you know, the public markets in the 1990s were terrific. You could raise a lot money and so forth. Now, by the time you go public, the vast majority of the gains have already been grabbed by professional investors. And so, you know, smaller investors can't even get at them. So I would say that I think the IPO market back then was better. And I think the discipline of a company going public is good.

Bill Gurley's talked a lot about this. So I think that's too bad that we've lost that. And I think in research, I don't look. Back in the 1990s, analysts were asked to do lots of different jobs. There were articles in Wall Street Journal all the way along. You know, analysts wear two hats. They write about stocks and they also talk to companies about raising money and the companies have to like them.

Of course, they would never choose the firm to take them. So analysts were in a position where they were doing a lot, and I would say, as an analyst, now, okay, fine. Now it's just right about stocks and talk to investors and so forth. But interestingly, one of the big things that was cited is proof that there was some deep corruption in research, which I do not believe there was, was that so many of the ratings were positive. So many of the ratings are still positive. And you know what? There are a lot of reasons for that.

One, analysts only cover the companies that they like, generally. Nobody likes a bear. You go out and just insult a company all day. You know, what are you doing? And when the markets are going up, especially in a sector like this, you know, most stocks go up. So there are a lot of reasons for it that have something to do with something else. And it's just been interesting to watch that that really hasn't changed that much. You know, in a way, it feels like we kind of have the worst of both worlds with early stage investing because we don't have the sort of

companies going public when they're young. But I keep seeing, you know, you see them on the subway, like these ads, like invest in private companies through an app. And it's like, you're not getting any information. You have no idea what valuations you're getting at. And so they're finding these ways to suck in retail money because they're attracted to these ideas of or buy SpaceX on the secondary market with no, you know, no 10 cues or anything. So in a way, it feels like the sort of worst of both worlds in terms of the public's access to early stage company. That is totally right. And in fact, when I first saw the first one of those go by in some feed or email,

it's like, oh, you can invest in this new organic wine company where there's no booze and so forth or whatever it happens to be. I said, whoa, I had the same reaction that Gordon Gecko had when he got out of jail in the second Wall Street movie where he's like, my God, all this stuff is legal now. Yeah. So it's legal. And you're right, it's terrible. All this secondary trading where you have no idea what the company's financials are.

And you have no idea what the capital stack looks like and how much preferred stock has piled on top of the crappy common stock that you're buying from some employee. You have no idea. So, yes, I think we're much better off in the world where it's just out there. And by the way, 95% of investors shouldn't go anywhere near early stage tech IPOs ever. matter how much money your friends are making. But there's a difference. Yeah, it's hard. But there's a difference between having a choice like that and just preventing it. And unfortunately, that's where we are. And I just don't think it's the financing pipes have rerouted. Companies are getting money. That's great. But I think having a little bit more ability to go public earlier would be great.

There's so much we could talk about. And we could, you know, we could, we haven't talked at all about the media business, and part because, like, I don't know, it's a little naval gazing, et cetera. We could take that in a million different directions. But I just have a simple question. Could you start a business insider today? So in business insider, I think started 2006 or 2000, it was Ali Insider. Now it's 20, 25. What's different today that either you could or you couldn't make that bet?

I think you could make it, I think far less likely to be successful. Because if you look at a media business, there are two pieces to it. There's the editorial and there's the distribution. And really what the internet did and what enabled some new companies for a while, a lot of new companies, but some new companies to grab hold in a way that would have been much more difficult before is distribution got completely blown up. Yeah. You look at newspapers. You look at cable. You look at all these different legacy media businesses.

They were all protected by the technology of the time. Internet blew all of that up. And, very importantly, it created eight hours during the workday where you were between the morning newspaper and the TV evening news where lots of cool things were happening. Hey, you want to know what's happening. And suddenly you have on your desktop business insider and Silicon Alley Insider is telling what's going on. And by the way, you have 432 websites that are reporting different things.

It's very convenient to have it all brought into one place for you, especially if it's adding analysis. It's like having a TV host or it's like having you guys, but at your convenience on a website. So we, early on, a lot of people addicted to that. You couldn't build that today because the web has been completely deprecated in terms of its influence. Everything has moved to apps. We're much more in a world where the media distribution looks much more like what it did in the TV and paper days, where it's controlled distribution. Shelf space matters. You don't have very much. And so now the big new companies that are being built are being built with direct distribution like email and app and so forth. And that's how my own media consumption has shifted.

I was a huge diehard web guy. Yeah, me too. And now it's just with the paywall situation, which is brutal. Like you've got to sign into every site on every platform. It's infuriating. It's much easier to just go to the app. So things have changed. So the original model for businesses would not have worked.

I do new models work. And business buyers do very well. Very so proud of them. very hard to come through this period and survive, and we are. By the way, Tracy, when I was hired at Business Insider, the name of the vertical that I originally worked for, been going 50 minutes without saying it, there's the name that you'll not go mention clusterstock.com. This is how I used to link to your work.

I wrote for Clusterthal at ClusterStop. Henry Blodgett. Thank you so much for coming on Oddlott. Could talk for a long time. Let me just add one more. This goes back and this is like a little special bonus. Yeah, okay. Tracy asked about this.

Oh, yes, please. Like, what is it about Joe Wisn't? Like, what is it? So I'll tell you, two. One, Tracy, when you're trying to build a startup, what has been described as hustle culture and since insulted as hustle culture as we have this big backlash to work-life balance and oppressive bosses and all of those stuff, it actually really. matters. You are running for your life. And the way Jeff Bezos described it to me after he invested was, you know, you guys have effectively created this little flame that you hold in the palm of your hand. And that is a huge accomplishment. Like you've created fire out of nothing. But all around

you, the winds are blowing. There are these huge forces that are threatening to snuff it out, like nurture that flame. Protect it. Make it. Make it. it grow. Eventually, it's a fire. So to do that, you actually need people who are totally dedicated. And Joe was extraordinarily dedicated. We had a team of a few folks who are around Joe's age, who really made Business Insider possible because they were so into it. And then the other Joe Wisenthal attribute that I think has contributed to Al-Latz becoming the thing that everybody has to listen to and so forth is Joe has a remarkable ability to inspire. other people to get excited about the way he sees the world and to work with him and so forth.

The lines moving on the chart. To the point where, yes, the New York Times famously back in those early days wrote a profile of Joe Wisenthal, which one could have interpreted as this poor man is insane. And he's going to drop dead. And this sounds like hell on earth, which is like 24 hours a day, eye twitching, waiting for the jobs report, all that stuff. But instead, Joe turned it into this incredible positive. And everyone was like, oh, my God, I want to not only be like Joe, I want to work with Joe and so forth. And I think your audience feels that enthusiasm.

One of the things you used to say to me a lot, which I loved, was everything is interesting. Yeah. And people, like, try to find the one thing that's interesting. Like when you really dive in and so you've taught yourself all about markets and stuff. So anyway. This is actually the foundation of odd lots. Everything. Everything interesting.

All right, we got to stop. I can't hear anymore. All right. We're good. We're good. Thank you very much. I'm just going to say, I don't know how many people I've told this. I don't know if I've told you, Henry.

I've told my therapist only. There were weekends in like 2010 and 2011. This is true. Where I would like wake up on a Saturday. This is like real disturbed unbalanced stuff. And something I think is I couldn't have had children in those years. I had children later. It'd been really hard.

And I would like wake up. I almost don't want to say this. I'd like want to like punch a pillow because it was like so intense. I need to get that out. And a few times I started typing emails to you because I was like so like upset. And then I was like, oh, actually I have nothing to be upset about. Like there was nothing specific. It was just like anyway, very intense times and difficult times.

But rewarding times. There was nothing wrong. But there was nothing wrong. It was just like this was like this sort of hot house. I wait. It's too much. No, because you bring up a good point. And maybe odd lots listeners interested in this.

Like we have in the past five, seven years. There's been this huge backlash against hustle culture. To that because it was like sort of damaging. And, you know, oppressive businesses and these terrible soulless jobs and so forth. And what I will say is, and I think you saw it too, and I've seen it in my own life a lot, is that actually work can be incredibly therapeutic. When you can find something that you can dive into and it becomes flow state, not to the point where it's totally obsessive and you're stressed all the time.

That's terrible. I guess all I meant to say was it was necessary. and I get the backlash is what I would say. It was a necessary energy and I get the backlash. Anyway, Henry Blodgett, thank you so much for coming on odd lots. It's such a privilege to be here with you. You guys do a great job and I will keep listening. Thank you so much.

Tracy, I'm sort of like a little emotionally rattled after that episode in a way I usually don't get after recording our typical podcast, I have to admit. Do you think you impressed your old boss? I think you did. I think so. I think he's proud. I think I, you know, yes. Do I still have this really intense like memories of like trying to surpass traffic goals and things like that from those years? Absolutely. And I think that sits in my mind still today when I look at like podcast download numbers or the Apple business

charts and stuff like that. Yeah. And also, I mean, I take the point that if you're a startup, you're running towards a proverbial finish line that actually never really comes. And so there's a sense of urgency. But it's a, it's working at that was clearly unsustainable, right? It's unhealthy. Well, that's what I said. I couldn't have had children. Yeah. And also, well, I was going to say, it locks a certain proportion of the population out of working for that particular market, which is a great. 100%. 100%. 100%. You know, Tracy, you mentioned that Henry sort of speaks in business insider headlines. A business insider headlines turned out to be very influential to headlines all over the place.

Absolutely. And so talking to Henry, it is sort of like seeing where, to some extent, like modern media came from. I mean, there were like a handful of these, you know, BuzzFeed was obviously another one, etc. Gawker, we've talked to Nick Denton. There were a handful of these like really important media brands of that era that to this day, like their own influence right now, probably diminished, but they're influenced more broadly

on how, like, you know, reporting and et cetera evolved is clearly evident to this day. Well, Henry's been influential in a number of ways, right? Like, not just on media, but he ended up being very influential on Wall Street as well. Yeah, absolutely. And we talked a little bit about that. You know what we should do. Once this episode publishes, we should look at the transcript and just pick out, like, every sentence that could be a B.I headline.

I bet you'd get like dozens, if not hundreds. That should be one of our newsletters when this thing comes out. I think that would actually be really fun. All right. Shall we leave it there? Let's leave it there. This has been another episode of the Alld Lots Podcast. I'm Tracy Allaway.

You can follow me at Tracy Allaway. And I'm Jill Wisenthall. You can follow me at the stalwart. Follow our guest, Henry Blodgett. He's at H. Blodgett. Follow our producers, Carmen Rodriguez at Carmen Armin. Dashel Bennett at Dashpot and Kale Brooks at Kail Brooks.

For more Odd Lots content, go to Bloomberg.com. We have all of our episodes in a daily newsletter. And you can chat about all of these topics 24-7 in our Discord, discord.g.g. slash oddlots. And if you enjoy Oddlots, if you like it when we talk to Joe's old bosses, please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes, absolutely add free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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